Supply Chain Management (SCM) is a discipline that tends to elicit a yawn from some people in the restaurant industry. They know it’s important, but just don’t see it as particularly relevant to their own career or area of expertise.
That’s partly because foodservice management traditionally emphasizes customer satisfaction and the consumer experience, relying on them to drive the top line and repeat visits. But while these are critical, it is often SCM behind the scenes that drives a brand’s operational efficiency and bottom line.
That’s especially true in our current landscape where food commodities are sourced globally and where purchasing, transportation and logistics costs can make or break a brand’s profitability. SCM touches and has implications for every part of a restaurant business. And it doesn’t matter if your company manages its supply chain with dedicated internal specialists or, as is increasingly common, partners with an SCM service provider.
Whether you’re in Culinary, Marketing, Operations or have some other role, making an effort to better understand how SCM works in your company can help you do your job better, build more successful teams and position you for advancement. Here are seven important ways your business skills (and career potential) improve when you apply SCM insights to them:
- You Improve Your Understanding of Market Dynamics
Supply Chain Management generates actionable data that lets you see more clearly what is happening concurrently at all levels of a business. Better data means better decision-making. It allows better management of supply and demand and lets one tackle problems or take advantage of opportunities in real time.
- Your Project Management Skills are Enhanced
Career opportunities are always enhanced for those able to demonstrate strong project management skills. Because SCM analyzes how actions in one part of the business affect another, understanding its principles makes it easier to coordinate resources and people across an organization and to keep them focused on project objectives.
- You Become Better at Assessing Risk Management
Risk exists in every part of the restaurant business, whether it comes from price and promotional competition in the marketplace, an unexpected food recall, or the vagaries of food costs due to bad weather or harvest shortfalls. When marketing works more closely with supply chain managers, they can jointly develop contingency plans in case consumer demand slows or food cost increases affect LTO profit forecasts.
- You Strengthen Your Negotiating Skills
You’ll gain a better understanding of how purchasing decisions and practices affect the businesses of your suppliers. Internally, SCM helps identify how culinary and menu development decisions affect total costs. Insights like these enable more constructive give-and-take in deal making and help you identify the factors that matter most to the other parties.
- SCM Helps You Drive Profitability
Supply chain management data shows more clearly how food costs, menu pricing, and consumer demand interact. It identifies the Total Cost of Ownership – not just purchase price – for food and supplies and makes menu and operational costing more accurate. It helps you identify the most profitable products and customer types so that marketing activities, culinary development and menu management are focused in ways that drive bottom line results.
- Your Supplier Relationships Are More Productive
Supplier relationships improve when key suppliers and restaurant chains understand how their business opportunities are interrelated. SCM insights help reduce inefficiencies in their mutual supply chain processes and drive more value from the relationship over time. That makes it easier for brands to obtain the most attractive pricing and development of proprietary items optimized for their operations.
- New Product Development Becomes More Strategic
New menu items are critical to restaurant chains, fueling promotions, and repeat business. SCM’s expertise in ingredient sourcing and commodity price forecasting go hand-in-hand with culinary R&D and promotional margin control. And once new items are introduced, supply chain managers ensure that supply and demand are balanced, keeping enough supplies in the pipeline to meet unit needs without obsolete inventory buildup. Marketing managers who coordinate with supply chain management have more successful LTO executions.
Finally, learning to take full advantage of SCM insights can help you see your company’s existing limitations in terms of how well it manages its supply chain. If it’s not being managed as well as it should be, that’s an opportunity to look for more supply chain talent or to find an SCM provider that can optimize your systems. In today’s highly competitive restaurant market, chains that ignore the advantages of better supply chain management do so at their peril. To learn more about how SpenDifference can assist in optimizing your supply chain systems, please contact us.